Novo Nordisk A/S is a Danish pharmaceuticals major with a market cap of over $160 billion. People need their medication even in recessions, so the company’s business wasn’t as affected by the 2020 crisis as most other industries.
Novo Nordisk remains a top-notch pharma with consistent profits and revenue and no debt whatsoever. And the stock reflects the quality of the business. It rose from DKK 32 in 2002 to as high as DKK 468 in October 2020. Currently not far below last year’s record high, is this a good time to buy Novo Nordisk shares?
The weekly chart above allows us to put the entire uptrend from that 2002 bottom in Elliott Wave perspective. It reveals a textbook five-wave impulse pattern, labeled (1)-(2)-(3)-(4)-(5). The five sub-waves of the third wave can also be seen.
If this count is correct, the bulls’ problem is not the company itself, which is of the highest quality. Their problem is that every impulse is followed by a three-wave correction in the other direction. We’ve already seen how that plays out in the stocks of Brookfield Partners, Rapid7 and SEI Investments, to name a few.
In addition, there is a strong bearish RSI divergence between waves (3) and (5) supporting the negative outlook. All this makes us believe a notable decline to roughly DKK 250 lies ahead. Novo Nordisk can lose 40% in market value before it is worth another look.
Similar Elliott Wave setups occur in the Forex, crypto and commodity markets, as well. Our Elliott Wave Video Course can teach you how to uncover them yourself!
